Jun. 21, 2010 (United Press International) -- The U.S. Supreme Court gave broad force to binding arbitration agreements in a 5-4 decision Monday.
The dispute before the court involved Antonio Jackson's discrimination claim against Rent-a-Center (NASDAQ:RCII) , a nationwide furniture and appliance rental company, and the company's requirement that any dispute be submitted to binding arbitration. Among the forms Jackson signed when he went to work for Rent-a-Center was an agreement to submit employment disputes to arbitration and waiving his right to sue in court.
At issue was whether a judge or an arbitrator would decide whether the arbitration agreement was unconscionable. The court reversed the judgment of the 9th U.S. Court of Appeals.
The court, in an opinion written by Justice Antonin Scalia, ruled that under the Federal Arbitration Act if the enforceability of the entire agreement is challenged, the arbitrator will handle the matter, while if someone challenges a portion of an agreement, the district court will consider the issue.
In this case, the agreement "included two relevant arbitration provisions: It provided for arbitration of all disputes arising out of Jackson's employment, including discrimination claims, and it gave the 'arbitrator ... exclusive authority to resolve any dispute relating to the (agreement's) enforceability ... including ... any claim that all or any part of this agreement is void or voidable,'" Scalia wrote.
Jackson challenged Rent-a-Center's contract was "unconscionable" in part because he said he had to sign the agreement with the arbitration clause if he wanted a job.
In his dissent, Justice John Paul Stevens wrote neither Rent-a-Center or Jackson urged the court to adopt the rule the Supreme Court adopted on Monday.
Under the court's decision, even when a litigant specifically challenges the validity of an agreement to arbitrate, "he must submit that challenge to the arbitrator unless he has lodged an objection to the particular line in the agreement that purports to assign such challenges to the arbitrator," wrote Stevens, joined by Justices Ruth Bader Ginsburg, Stephen Breyer and Sonia Sotomayor.
"Its (the majority option) breezy assertion that the subject matter of the contract at issue -- in this case, an arbitration agreement and nothing more -- 'makes no difference' is simply wrong," Stevens wrote.
Joining Scalia were Chief Justice John Roberts and Justices Anthony Kennedy, Clarence Thomas and Samuel Alito.
